IN THIS ISSUE:
? TennCare Cuts Benefits for 700,000+
? Clinton Thinks TennCare is Just Swell
? Jeb Bush Proposes Health Accounts in Medicaid
? New Hampshire HHS Commissioner Wants HSAs in Medicaid
? South Carolina Proposes HSAs in Medicaid
? Maine?s DirigoChoice Enrollment Only One-Third of Expected
? Maryland Legislature Overrides Malpractice Veto
? State Policy Network ? Essential Resource
? AHIP Finds Half-Million in HSAs
TennCare Cuts Benefits for 700,000+
Tennessee Governor Phil Bredesen has announced he will be slashing TennCare coverage for adults, according to Anita Wadhwani in ?The Tennessean.? The cuts will drop the expected increase in TennCare spending from an additional $650 million to just $75 million. Altogether, the program will drop 323,000 adults, and nearly 400,000 other enrollees will have their benefits limited. The article quotes the governor as saying, ?When this is all done and over, we should still end up with one of the broadest, most generous [Medicaid] programs in the country.? Enrollees being dropped from the program will have only 30 days to find other coverage. Tennessee has been paying only one-third of the cost with the rest picked up by the federal government.
Clinton Thinks TennCare is Just Swell
TennCare has been a nightmare, not only from a fiscal point of view, but for enrollees as well. The people of Tennessee would have been better off had it never been adopted because they would have continued their private coverage.
Now they have only 30 days to find private coverage, and many of them are likely now to be uninsurable. But former President Bill Clinton is undeterred. ?The Tennessean? reported just before Christmas that Mr. Clinton thinks the program is just swell and only needs to be federalized. And former Vice-President and Tennessee Senator Al Gore blames TennCare?s problems on President Bush. ?TennCare was sandbagged by failure at the national level to deal with health care,? he maintains.
Jeb Bush Proposes Health Accounts in Medicaid
In Florida, Governor Jeb Bush is also tackling the problem of Medicaid costs, which are expected to consume one-third of the state budget by 2009. An article in “The News-Press? quotes him as saying, ?We want to empower the people in the Medicaid program to control their own health care, to choose their coverage, their doctors and their treatments.?
He would privatize the system by providing a risk-adjusted premium to each recipient who would then shop for coverage from private vendors. The article says that ?Bush?s plan would let some patients set up their own health care accounts, and is designed to persuade more specialty providers to take Medicaid patients.? The program covers 2.2 million individuals and costs the state $14 billion.
New Hampshire HHS Commissioner Wants HSAs in Medicaid
Florida is not the only state looking at health accounts for Medicaid recipients. The Commissioner of Health and Human Services in New Hampshire has an ?ambitious plan to reform Medicaid that would ? give low-income families a health savings account for their children?s care,? according to the “Nashua Telegraph.” Commissioner John Stephen estimates that his plan, combined with restrictions on nursing home admissions, would save the state $13 million over two years, but the savings would grow to $142 million by 2010. The concept was supported by out-going Governor Craig Benson, but attacked by Governor-elect John Lynch during the campaign. More recently, the governor-elect has said he would consider the idea.
South Carolina Proposes HSAs in Medicaid
South Carolina predates Florida and New Hampshire in looking at HSAs and Medicaid. Writing in “The Post and Courier”
on November 20, Jonathan Maze reports that ?South Carolina?s Medicaid agency is proposing a major overhaul of the government health care program by giving recipients a limited number of dollars each year over which they would have direct control.? The article says that Commissioner Robert Kerr ?would give most of the state?s 850,000 Medicaid recipients a debit card good to use for doctor visits and prescription drugs.? He said the program could save money by ?turning Medicaid recipients into smarter health care consumers,? and lowering administrative costs. Mr. Kerr says that Governor Mark Sanford would like to see the changes ?tomorrow.? But he acknowledges there are ?lots of things we don?t know. What we do know is that if we don?t talk about it, we won?t move anywhere.?
Maine?s DirigoChoice Enrollment Only One-Third of Expected
Meanwhile, Maine?s DirigoChoice plan ?is confusing for both employers and employees,? according to The Maine Heritage Policy Center. In the Winter, 2005 issue of DirigoWatch, the Center reports only 2,700 people have enrolled as of January, as compared to a projection of 8,267 by the state. Why so few? Well, for one thing the coverage is expensive, costing from $4,666 for a $250 deductible to $3,718 for a $1250 deductible. That is for a single employee.
The employer is required to pay $2,231 of that with either taxpayers or the worker making up the difference. The program is bafflingly complex with income-based benefit structures (the higher the income, the lower the benefits).
So each person at a work site could have a different set of benefits as determined, not by the consumer, but by the state. The tax subsidies are based on total household income and assets, requiring workers to reveal to a state agency great detail about their financial condition. There are also drastic marriage penalties, fertility inducements and leaps in cost as income rises. It is the kind of program only a very well-educated bureaucrat could design.
SOURCE: The newsletter is available at the Center?s web site http://www.mainepolicy.org
Maryland Legislature Overrides Malpractice Veto
In Maryland, the Democratic-controlled legislature overrode Republican Governor Bob Ehrlich?s veto of a malpractice bill that essentially taxes consumers to pay for physician malpractice premiums without doing anything significant about the underlying problem. The trial lawyers, hospitals and medical association all thought it was just swell to have taxpayers subsidize their gravy train. Watch for this model to roll out in a state near you. Other than the governor and a few out-gunned legislators, about the only voice objecting to this fleecing of taxpayers was the Maryland Public Policy Institute that released a report on malpractice reform and has written a number of op-eds as the issue progressed.
SOURCE: For a “Baltimore Sun” article on the veto override — http://www.baltimoresun.com/news/local/politics/bal-te.md.assembly12jan12,1,2804538.story?coll=bal-home-headlines
For a copy of the MPPI report, go to their web site at http://www.mdpolicy.org
For an example of an op-ed on the issue, go to — http://www.herald-mail.com/?module=displaystory&story_id=101186&format=print
State Policy Network ? Essential Resource
In the two stories above, the role of the local free-market think tank has been essential. They are able to stay on top of these important and potentially nationally significant developments far better than any national group can, and they can provide a detailed analysis of the issue that can help people in other states deal with it when it rears its ugly head. Both of these groups are members of the State Policy Network, which helps launch similar organizations and provides essential expertise on fundraising, management, networking, and issues resources. Be sure to check out the SPN website to locate the think tank nearest you. These organizations are always eager to work with people who can bring experience, expertise and contacts to the group. Many have advisory committees, boards of directors, or visiting scholars programs you might be able to tap into.
AHIP Finds Half-Million in HSAs
Finally, AHIP has become one of the biggest boosters of HSAs. It has launched a web site that is terrific, and just today released a survey of its members on HSA enrollment. The number it released was 438,000 people covered by September, 2004. There are a few things to keep in mind about this number. First, it goes only to September.
It is characteristic of HSAs that enrollment will be very low in the third quarter of a year because the individual is subject to 100% of the deductible even though only a fraction can be contributed to the HSA. It is very likely that the number doubled or tripled in November and December as people got ready for the 2005 calendar year. Second, the survey is of AHIP members only and is based on responses from only 29 companies. Many (most?) Blue Cross Blue Shield companies are not AHIP members, for instance, so would not have been captured by this information. Also, many self-insured employers would not be captured here. I believe the number at year?s end is much higher than this number, possibly three times as much (1.5 million).
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